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Short-term rental (Airbnb) rules in Morro Bay, California

Morro Bay, San Luis Obispo County · Ordinances checked 2026-10-05 · Reviewed · 11 cited sections

Restricted

Yes, with a city short-term vacation rental permit, a business license and a TOT account. Whole-home rentals in residential zones are capped at 175, must be 175 feet from any other whole-home rental, and new ones go on a waitlist. Home-shares where you stay on site in your primary residence aren't capped. ADUs and JADUs can't be used as short-term rentals.

RequiredSTR permit + city business license (permit valid up to 12 months) [1]
Full-home cap in residential zones175 (waitlist when full) [2]
Spacing between full-home STRs175-ft radius from property line [3]
Home-share rentalsNot capped; host's primary residence, host on site [4]
ADUs / JADUsCan't be used as STRs [5]
Max occupancy (full-home)2 per bedroom + 2, max 10 guests [6]
ParkingAll guest parking on site; no street parking [7]
Minimum annual TOT$500 [8]
Waitlist fee$50 one-time [10]

Permits and taxes

Short-term vacation rentals (30 consecutive days or less) need a current Morro Bay STR permit and a city business license. The property owner must obtain the permit, which lasts no more than 12 months unless renewed [1]. Permits don't transfer to a new owner. You must collect transient occupancy tax (TOT) and tourism assessments, and each rental must pay at least $500 in TOT a year to keep its permit [8]. The city inspects at the initial application and every four years at renewal. Renewals are due 60 days before expiration; if the renewal is filed after the permit expires, the permit is treated as abandoned and you must reapply under the cap [9].

Full-home vs. home-share

  • Full-home rentals (host not present): capped at 175 in residential zones. No new applications are accepted until active permits drop below 175, and applicants go on a first-come waitlist [2]. Each must be at least 175 feet (measured from property line) from any other full-home rental in a residential district, and only one is allowed per lot with a detached house [3]. The city webpage says the City Council authorized five new residential full-home permits for 2026, all already issued or in process, and will set the 2027 number in January 2027 [11]. Joining the waitlist costs a one-time $50 [10].
  • Home-share rentals: in your primary residence with you on site throughout the stay [4]. The 175 cap doesn't apply. STRs in commercial and mixed-use zones aren't capped.

What can't be rented

STRs can't operate from ADUs or junior ADUs, except legal nonconforming permits [5]. They're also banned in sheds, unconverted garages, vehicles, unpermitted units, affordable housing units, mobile home parks and multi-family developments in residential districts. A guest house can only be rented as a home-share.

Operating rules

  • Occupancy: two people per bedroom plus two, max 10 guests, for full-home rentals [6].
  • All guest parking must be on site [7].
  • Primary renter must be 21 or older.
  • A 24/7 local contact must respond within one hour.
  • Post a sign visible from the street with the permit number and contact info, and put the permit number in every ad.

Violations can bring fines, suspension or revocation, and a two-year bar on reapplying.

See how Morro Bay compares with 8+ other California towns on short-term rentals (airbnb / vrbo) →

Next steps

  1. Talk to Community Development staff (str@morrobayca.gov, 955 Shasta Ave.) to confirm your zoning, the 175-ft spacing and parking.
  2. For a full-home rental in a residential zone, submit an STR application and pay the one-time $50 fee to join the waitlist; home-shares and commercial-zone STRs can apply now.
  3. Prepare the application packet: owner-signed application, proof of STR insurance, house rules, hosting platforms, parking and occupancy details, and the completed inspection report.
  4. Get a city business license and open a TOT account before your first booking, and include your permit number in every listing.

Common questions

Are short-term rentals allowed in Morro Bay, California?
Yes, with a city short-term vacation rental permit, a business license and a TOT account. Whole-home rentals in residential zones are capped at 175, and new ones go on a waitlist; home-shares where you stay on site in your primary residence aren't capped.
How do I get on the short-term rental waitlist in Morro Bay, California?
Submit an STR application and pay the one-time $50 fee to join the first-come waitlist. Each full-home rental must also be at least 175 feet from any other full-home rental in a residential district.
What is the occupancy limit for a vacation rental in Morro Bay, California?
Full-home rentals allow two people per bedroom plus two, with a maximum of 10 guests. All guest parking must be on site.
Can I Airbnb my ADU in Morro Bay, California?
No. STRs can't operate from ADUs or junior ADUs, except legal nonconforming permits, and they're also banned in sheds and unconverted garages.

California state rules for short-term rentals

California has no statewide short-term rental license or registry. Your city or county decides whether and how you can rent on Airbnb or VRBO, including permits, caps, primary-residence rules and minimum stays.

Taxes: cities and counties may levy a transient occupancy tax (TOT) on stays of 30 days or less (Rev. & Tax. Code §7280). Rates and registration are local, and the county rate applies only in unincorporated areas.

New platform reporting law: since January 1, 2026, a city or county can adopt an ordinance requiring platforms like Airbnb and VRBO to report the address of each short-term rental (Gov. Code §50990 et seq., SB 346). Where a city has opted in, listings must also show the local license number and TOT certificate.

ADUs and SB 9 units: state law lets cities require that ADUs be rented for 30 days or longer. It requires that for by-right ADUs, junior ADUs and units built under SB 9 lot splits (see ADUs).

Coastal zone: in a December 2016 letter, the Coastal Commission said:

  • STR rules in the coastal zone must be adopted through the city's Local Coastal Program or a coastal development permit, and bans adopted any other way are likely not enforceable there.
  • The Commission has not historically supported blanket STR bans, finding they unduly limit public access to the coast.
  • It has supported reasonable limits, such as caps on the number of rentals, occupancy limits, and limits on which housing types can be rented.

State sources: Rev. & Tax. Code §7280 (transient occupancy tax) · SB 346 (2025), Stats. 2025, ch. 751 (short-term rental facilitator reporting) · Gov. Code §66315 (ADU rentals of 30 days or longer) · Gov. Code §66323 (by-right ADU rentals longer than 30 days) · California Coastal Commission, Short-Term/Vacation Rentals in the California Coastal Zone (Dec. 6, 2016)

What the ordinance says

Exact text from Morro Bay's published ordinances. Section numbers are as printed in the source.

  1. Sec. 17.30.220(C)(1), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Short-term vacation rentals may only be operated pursuant to a current and valid short-term vacation rental permit from the city of Morro Bay, as well as a current and valid city business license, in accordance with all the requirements of this section. Permits shall be obtained by the property owner. Permits shall be valid for no more than twelve months, unless renewed.
  2. Sec. 17.30.220(D)(1), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    No new permit applications for full-home short-term vacation rentals in a residential zone will be accepted until the number of active permits drops below one hundred seventy-five. This limitation shall not apply to home-share short-term vacation rentals in residential zones.
  3. Sec. 17.30.220(D)(4)(a), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Single-family dwelling full-home short-term vacation rentals in residential zones must be separated by a one hundred seventy-five feet radius (as measured from exterior property line) from any other full-home short-term vacation rental in a residential district.
  4. Sec. 17.30.220(B)(5), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    "Home-sharing rental" means a short-term vacation rental within a dwelling that is the host's primary residence, and where the host is on site throughout the guest's stay.
  5. Sec. 17.30.220(C)(14), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Notwithstanding any other provision herein, short-term vacation rentals shall not be operated out of accessory dwelling units or junior accessory dwelling units, as provided in state law, except as provided for in Section 17.30.220 E, Nonconforming Short-Term Vacation Rentals.
  6. Sec. 17.30.220(I)(7), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Occupancy for each full-home rental shall be limited to two individuals per bedroom, plus two, for a maximum of ten guests; occupancy for home-share rentals shall be limited to two individuals per bedroom.
  7. Sec. 17.30.220(I)(3)(a), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Short-term vacation rentals must provide sufficient onsite parking spaces for their guests; no offsite or other street parking is allowed.
  8. Sec. 17.30.220(C)(11), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Short-term vacation rentals must contribute a minimum of five hundred dollars of TOT annually to maintain a valid permit.
  9. Sec. 17.30.220(F)(5)(c), Municipal Code Title 17 Ch. 17.30 Standards for Specific Uses (17.30.040 ADUs; 17.30.060 animal keeping; 17.30.130 home occupations; 17.30.220 short-term vacation rentals; 17.30.270 urban agriculture), p. 1
    Any permit whose renewal application is submitted after the permit's expiration shall be deemed abandoned. Reapplication shall only be accepted in full compliance with all the provisions of this section, including the density limitations.
  10. City STR webpage, Full-home Residential STR Permits, Short-Term Vacation Rentals - City webpage, p. 1
    You may join the waitlist for a full-home residential STR by completing and submitting an STR Application and paying a one-time $50 waitlist fee.
  11. City STR webpage, Full-home Residential STR Permits, Short-Term Vacation Rentals - City webpage, p. 1
    The City Council authorized the issuance of five new full-home residentially zoned STR permits in 2026. These five new permits have already been issued or are currently in process.
This page summarizes Morro Bay's posted ordinances as of 2026-10-05. Ordinances are amended, and individual lots can have overlays, subdivision covenants, or HOA rules that are stricter. Confirm with City of Morro Bay Community Development Department - Building Division (Building Inspector/Code Enforcement Officer 805-772-6213), 955 Shasta Avenue; Harbor Department handles waterfront enforcement (805-772-6267) before you build. Spot an error?